First, as show on your own chart, OPEX likely to trend higher than rents. Setting rents is a POLITICAL process. Note: insurance costs have sky rocketed for older rent stabilized buildings with lower income populations.
Second, people sometimes don't pay their rent - has become a huge problem since COVID (even from tenants receiving vouchers). Recourse to the courts is extremely time consuming and EXPENSIVE. Even if the landlord eventually wins, the landlord always loses. Cost. Lost income. Asset waste (and this is big: cost to repair on vacancy). You don't recover your costs with a reasonable return.
I strongly disagree. Owning rent‑stabilized buildings is essentially holding a perpetually wasting asset—like the “cigar‑butt” bargains Warren Buffett hunted in his early investing days: one last puff of value before you’re left with ashes.
Roman: Way off here. Not like:
- 6.0% real yields on 20-year holds
- 2–3% annual OPEX growth
- 1–2% unit turnover annually
First, as show on your own chart, OPEX likely to trend higher than rents. Setting rents is a POLITICAL process. Note: insurance costs have sky rocketed for older rent stabilized buildings with lower income populations.
Second, people sometimes don't pay their rent - has become a huge problem since COVID (even from tenants receiving vouchers). Recourse to the courts is extremely time consuming and EXPENSIVE. Even if the landlord eventually wins, the landlord always loses. Cost. Lost income. Asset waste (and this is big: cost to repair on vacancy). You don't recover your costs with a reasonable return.
Nothing like clipping coupons.
I strongly disagree. Owning rent‑stabilized buildings is essentially holding a perpetually wasting asset—like the “cigar‑butt” bargains Warren Buffett hunted in his early investing days: one last puff of value before you’re left with ashes.